Index funds vs active funds
An index fund tracks a market index at low cost. An active fund pays a manager to try to beat it. Cost is the most reliable predictor of long-run fund returns, and the gap compounds over decades.
What it means
An index fund tracks a market index at low cost. An active fund pays a manager to try to beat it.
Why it matters to a household
Cost is the most reliable predictor of long-run fund returns, and the gap compounds over decades.
Where it trips people up
Judging an active fund on three years of performance, which is mostly noise.
In an Indian household
A growing share of Indian large-cap active funds have trailed their benchmark over long periods, which is why index funds have taken hold in that segment.
Where FamTally comes in
FamTally is a free AI-driven money manager built for Indian families. It holds your loans, income, expenses, assets, insurance and goals in one place, forecasts five years ahead, and lets you ask an assistant questions about your own numbers rather than looking up general advice. Everything on this page is the kind of thing it works out for you automatically.
Stop doing this in a spreadsheet
FamTally keeps your loans, income, expenses, assets, insurance and goals in one place, forecasts five years ahead, and answers questions about your own numbers. Free, and built for Indian families.
Start freeQuestions people ask
Index funds vs active funds
An index fund tracks a market index at low cost. An active fund pays a manager to try to beat it.
Why does it matter?
Cost is the most reliable predictor of long-run fund returns, and the gap compounds over decades.
What do people usually get wrong?
Judging an active fund on three years of performance, which is mostly noise.
Is there anything India-specific?
A growing share of Indian large-cap active funds have trailed their benchmark over long periods, which is why index funds have taken hold in that segment.